Monday, April 11, 2011

Irony Alert: Government Victims' Fund Declines to Compensate Victims

Who could've seen this coming? According to this report from California Watch, the secretary of state's Victims of Corporate Fraud Compensation Fund has, apparently, been a bit stingy in the 8 years since it was conceived.

Secretary of State Deborah Bowen, signing something other than victim compensation checks
The idea of the fund is simple: a portion of the annual filing fee for California corporations goes into a fund that's used to compensate those who lose money as a result of corporate fraud. Since 2003, the fund has received 675 claims for restitution. The total number of claims paid? Six. Out of a fund currently valued at $14.3 million, a total of $92,500 has been paid in eight years.

What's more, the fund is currently trying to skimp on payments to 500 Sacramento-area seniors who were defrauded by a bogus financial counseling service. Though the Department of Justice agreed that the seniors had been defrauded, most to the tune of about $10,000, the secretary of state is arguing that the 500 seniors should be treated as a single claimant. Since the maximum payout is $20,000, each senior would get approximately $40 for their troubles.

Something tells us we haven't heard the last of this story.
Posted by Nick at 9:49 AM
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4 comments:

  1. DifsterApr 12, 2011 12:11 AM
    Funny how government never manages to fix problems that government created in the first place, especially when government refuses to acknowledge that they created the problem.

    There should be no such thing as the legal entity of the corporation. People run corporations and people should be held accountable for fraudulent activity.

    End the legal corporate entity.
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  2. GSLApr 12, 2011 09:00 AM
    No argument here. But that's California for you: we think corporations are evil here, except when they're chipping in tax revenue or campaign contributions.
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  3. randianMay 16, 2011 10:18 PM
    Has it been said why the fund isn't making payments? I've seen this kind of thing in other contexts, and usually it was because the fund was being used as a slush fund by its managers, or outright embezzlement had occurred, and refusing payouts was their way of hiding the fact that money was missing. I think a forensic audit is in order. Naturally, that won't happen.
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  4. GSLMay 17, 2011 07:37 AM
    Yeah, there hasn't been any follow-up to the story. I would guess that the money is being embezzled as you say, but to be fair, it's also possible that this is just an example of mind-numbing bureaucratic incompetence at work.
    ReplyDelete

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